IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

CENTRIX HR, LLC : CIVIL ACTION 

v. :

ON-SITE STAFF MANAGEMENT, INC. : NO. 04-5660

d/b/a/ CENTRIX STAFFING, et al.

MEMORANDUM OF DECISION

THOMAS J. RUETER April 20, 2010

Chief United States Magistrate Judge 

This Memorandum of Decision addresses the calculation of counterclaim

plaintiff’s damages after remand by the Third Circuit Court of Appeals. Centrix v. On-Site Staff

Management, Inc., Nos. 08-2834 & 08-2984 (3d Cir. Oct. 19, 2009).

I. TRIAL COURT – PROCEDURAL HISTORY

The court conducted a bench trial in the above-captioned case from October 22 to

October 24, 2007. Thereafter, the court issued a Memorandum of Decision dated March 25,

2008 (the “March 2008 Opinion”). The court entered judgment in favor of plaintiff Centrix HR,

LLC (“HR”) and against defendants, On-Site Staff Management, Inc. (“On-Site”), Centrix HR

Logistics, Inc. (“Logistics”) and William Black, as guarantor, jointly and severally, on Count 6 of

the Complaint in the amount of $865,999.36. The court also entered a judgment on Count 6 of

the Complaint in favor of plaintiff HR in the amount of $1.00 for the breach of the non-compete

clause of the Licensing Agreement. On the remaining counts of the Complaint, judgment was

entered in favor of defendants and against HR. See March 2008 Opinion. 
Defendant Logistics asserted numerous counterclaims against plaintiff (the

“Counterclaims”). The court entered judgment in favor of Logistics and against HR on Counts 1

and 2 of the Counterclaims (Breach of Contract and Conversion) in the amount of $1,603,673, to

be offset by the $865,999.36 judgment against Logistics and in favor of plaintiff, for a balance of

$737,673.70, plus pre-judgment interest. Judgment was entered in favor of HR and against 1

Logistics on Count 3 of the Counterclaims (Accounting). See March 2008 Opinion. 

Thereafter, plaintiff filed a Motion for Reconsideration, and/or for a New Trial or

to Correct, Amend or to Supplement the Court’s March 25, 2008 Order and/or to Make

Additional or Supplemental Findings of Fact (Doc. No. 53). Defendants filed a Motion for

Relief Pursuant to Federal Rules of Civil Procedure 52, 59 and 60 (Doc. No. 54). The parties

filed various briefs in support of and in opposition to the motions. The court issued a second

Memorandum and Order dated June 3, 2008 (the “June 2008 Opinion”). For the reasons stated in

the March 2008 Opinion and the June 2008 Opinion, this court found that Logistics is liable to

plaintiff for loans in the amount of $865,999.36, which amount shall be offset by amounts

plaintiff owes to Logistics in the amount of $1,603,673. The court also found that defendant OnSite, as the successor corporation, is merely a continuation of Logistics and therefore is liable for

its debts. The court revised its prior judgment and concluded that defendant Black is not liable

under the Guaranty Agreement for Logistics’ obligations to plaintiff. However, defendant Black

In this court’s Memorandum and Order dated June 3, 2008, the court noted that 1

the correct amount owed Logistics by HR was $737,673.64 ($1,603,673.00 - $865,999.36). 

However, because plaintiff did not object to the six cents discrepancy and because the difference

is not material, the court declined to amend the judgment order. (June 2008 Opinion at 14 n.10.)

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remained liable for damages in the amount of $1.00 for breach of the non-compete provision of

the Licensing Agreement. See June 2008 Opinion. 2

II. THIRD CIRCUIT COURT OF APPEALS – REMAND

Thereafter, plaintiff appealed various aspects of this court’s order, and defendants

cross-appealed on one issue. Centrix v. On-Site Staff Management, Inc., Nos. 08-2834 & 08-

2984, slip op. at 2 (3d Cir. Oct. 19, 2009) (the “Third Circuit Opinion”). The Third Circuit Court

of Appeals affirmed on all issues except as to the calculation of the award of counterclaim

damages, which the Third Circuit Court of Appeals remanded for further consideration. Id.

The Third Circuit Court of Appeals stated as follows with respect to this court’s

award of counterclaim damages to Logistics and its mandate on remand.

HR argues that the Magistrate Judge clearly erred when he awarded

approximately $1.6 million to Logistics on its counterclaim, representing the net

amount due to Logistics based on HR’s own books. HR does not appear to

dispute that its books showed that it owed Logistics a net amount of $1.6 million

at the conclusion of the parties’ relationship. It argues, however, that the correct

amount of damages should have been $505,965, because, at various points in the

litigation, Defendants made clear that they were seeking only $505,965 in

damages on the counterclaim.

Defendants’ expert testified at trial that the total amount owed to Logistics

was $1.6 million, but he also testified, almost immediately thereafter, that

$505,965 was “the amount that would be required to restore [Logistics] to the

financial position it otherwise would have been in, had there been no breach that

is alleged in the counterclaim” – “the amount due to Logistics from [HR] ....” 

(App. at 229.) Moreover, while the $1.6 million figure is listed as “net amount

due [Logistics]” in Exhibit B to the expert’s rather sparse report, Exhibit A to that

report lists $505,965 as the “Total Net Amount Due [Logistics].” (Id. at 107-08.) 

Defendants also argued for $505,965 in their Proposed Findings of Fact and

The court has summarized herein its findings of fact and conclusions of law set 2

forth in detail in the March 2008 and the June 2008 Opinions. Reference is made to the March

2008 and the June 2008 Opinions for the court’s full statement of its findings of fact and

conclusions of law.

3
Conclusions of Law and post-trial brief (although, at another point in the brief,

they stated that the total amount owed by HR to Logistics was $1.6 million and

that any award to HR should be offset by this amount), and counsel summarized

the counterclaim to the Magistrate Judge saying “my client is out a half of a

million bucks.” (Id. at 279.)

HR moved for reconsideration of the $1.6 million award. The Magistrate

Judge denied the motion, concluding that the Proposed Findings of Fact and

Conclusions of Law were not evidence, that there was sufficient evidence to

support the $1.6 million figure in the form of HR’s own records and Defendants’

expert’s unrefuted testimony, and that at trial Defendants’ expert qualified his

calculation of $505,965, stating, “Yeah, when you take everything into account

and if you accept the arguments in the counterclaim and if you find liability, that

would be the amount . . . .” (Id. at 229.) The Magistrate Judge stated that it was

“unclear” what the expert thought had to be taken “into account” to arrive at the

$505,965 figure or even which counterclaim the expert was referencing. (Id. at

393.) What is clear, at least to us, is that the expert directly, albeit confusingly,

undermined the $1.6 million figure and did so right on the heels of having first

espoused it.

Given the contradictions noted above, the inadequate explanation by the

parties and the Magistrate Judge of those contradictions, and the somewhat

haphazard portions of the record presented to us on appeal, we are unable to

determine that the Magistrate Judge’s award of $1.6 [sic] was clearly erroneous –

or that it was not. Accordingly, we will remand this issue to the Magistrate Judge

for clarification or recalculation of that award. We are confident that, following

clarification or recalculation, there will be no need for further review.

Third Circuit Opinion at 6-8 (footnote omitted).

In light of the Third Circuit Court of Appeals’ remand quoted above, the court

held a hearing on January 21, 2010 (the “Remand Hearing”). Prior to the Remand Hearing, this

court ordered the parties to submit prehearing memoranda listing, inter alia, all witnesses and

exhibits to be introduced at the Remand Hearing (Doc. Nos. 77 and 78). The parties submitted

Proposed Findings of Fact and Conclusions of Law prior to the Remand Hearing (Doc. Nos. 79

and 80). Counsel also submitted Proposed Findings of Fact and Conclusions of Law after the

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Remand Hearing (Doc. Nos. 93 and 94). On March 29, 2010, plaintiff submitted a response to

the Proposed Findings of Fact and Conclusions of Law submitted by Logistics (Doc. No. 95).

On March 17, 2010, well after the conclusion of the Remand Hearing, plaintiff

filed a Motion to Strike Defendants’ Expert Report, Expert Testimony, and Evidence of Damages

Pursuant to Fed. R. Evid. 702 and 703 (the “Motion to Strike”) (Doc. No. 92). Counsel for

Logistics filed an opposition to the Motion to Strike on April 5, 2010 (Doc. No. 96). Plaintiff

filed a Reply by letter dated April 12, 2010. 

3

III. DISCUSSION

A. Logistics’ Counterclaims and the Licensing Agreement

At the Remand Hearing, Logistics presented testimony and evidence regarding

amounts due to Logistics by HR under the Licensing Agreement. This court will briefly address

Logistics’ counterclaims and the Licensing Agreement at issue.4

Defendant Logistics asserted three counterclaims against HR based upon a certain

Licensing Agreement. See Answer with Affirmative Defenses of Defendants with Counterclaims

Against Plaintiff by Defendant Centrix HR Logistics, Inc. at 10-14 (the “Ans. with

Counterclaims”). It is undisputed that plaintiff, as licensor, and Logistics, as licensee, entered

into a Licensing Agreement dated March 15, 2002 (the “Licensing Agreement”). See Ans. with

Counterclaims ¶5; Plaintiff’s Answer to Defendants’ Counterclaims ¶5 (“Pl.’s Ans. to

The court will address the Motion to Strike herein. 3

Reference is made to the March 2008 Opinion for a complete discussion of 4

Logistics’ Counterclaims and the Licensing Agreement.

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Counterclaims”). Plaintiff and Logistics each submitted a copy of the Licensing Agreement as an

exhibit at the trial (“Tr. Ex.”). See Tr. Ex. P-2; Tr. Ex. D-7. 

Pursuant to the terms of the Licensing Agreement, HR was to provide

employment related services to Logistics. See, e.g., Licensing Agreement ¶¶ 3, 6. Pursuant to

the terms of the Licensing Agreement, HR was to collect payments owed by Logistics’ clients for

services provided. See Licensing Agreement ¶ 3A. Logistics was to instruct all clients to make

payment for services to HR at an address specified by HR. See Licensing Agreement ¶ 5. The

Licensing Agreement required HR to deposit all monies thus collected into a General Operating

Account (“GOA”). All funds necessary to timely pay HR’s payroll taxes, withholdings, and

statutory additions were to be transferred to an escrow account from the GOA. See Licensing

Agreement ¶ 6. Any funds received from clients or from any funding source in excess of the

monetary requirements to timely pay Licensor’s payroll, withholding, statutory additions, funding

fees charged to HR by the funding source, and service fees due and owing to HR, were to be

deposited into a Reconciliation Account and dispersed to Logistics on a daily basis. Id. 

In the Counterclaims, Logistics argued, inter alia, that HR violated various terms

of the Licensing Agreement. Specifically, Logistics argued in its Counterclaims that, inter alia,

in violation of the Licensing Agreement, and despite demands made by Logistics, HR never

deposited the fees due to Logistics into the Reconciliation Account, never disbursed those fees to

Logistics, and improperly retained and converted those fees to its own use. (Counterclaims ¶ 11.)

Logistics also asserted in its Counterclaims that HR, in violation of the Licensing Agreement,

failed to: (1) report and/or pay all applicable federal, state and local payroll taxes and

unemployment insurance for employees provided by HR to its clients; (2) provide Logistics with

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weekly reports detailing HR’s invoicing of clients, collection of fees from clients, payment of

payroll to employees, payment of withholding and statutory additions and benefits administration

services; (3) provide Logistics with monthly, quarterly and annual financial statements, including

a balance sheet and income statement; and (4) provide Logistics with copies of HR’s state and

federal income tax returns. The Licensing Agreement was terminated by Logistics on December

1, 2003. (Counterclaims ¶¶ 12-20.)

In its Counterclaims, Logistics argued that the conduct described therein in

paragraphs one through twenty constitutes a material breach of the terms of the Licensing

Agreement (counterclaim alleging breach of contract). In addition, Logistics specifically asserted

that the failure of HR to deposit the fees due to Logistics in the Reconciliation Account and

retaining those fees constitutes conversion by HR of Logistics’ funds and assets (counterclaim

alleging conversion). Finally, Logistics maintained that as a result of HR’s conduct, Logistics is

entitled to an accounting of all sums received by HR from clients and funding sources and all

payments made to HR pursuant to the terms of the Licensing Agreement and to have remitted to

Logistics all fees due (accounting counterclaim). (Counterclaims ¶¶ 21-27.) After the trial, the

court entered judgment in favor of Logistics and against plaintiff on counts 1 and 2 of the

Counterclaim (breach of contract and conversion), and entered judgment in favor of HR and

against Logistics on count 3 of the Counterclaim (accounting). See March 2008 Opinion at 37-

39.5

The court has summarized the Counterclaims for the purpose of addressing HR’s 5

claim that Logistics failed to raise as a Counterclaim that plaintiff HR failed to make payments as

required under the Licensing Agreement. As this court concluded at the trial and in the March

and June 2008 Opinions, Logistics adequately plead as a counterclaim that plaintiff violated the

terms of the Licensing Agreement, including a counterclaim that plaintiff failed to turn over fees

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B. Evidence Presented at the Remand Hearing by Logistics

At the Remand Hearing, Logistics presented the testimony of its trial expert

Charles S. Lunden, CPA. For the trial, Mr. Lunden issued a report (the “Lunden Report”). (Tr.

Ex. D-50.) As noted by the Third Circuit Court of Appeals, and by this court in the March 2008

Opinion and the June 2008 Opinion, Mr. Lunden’s testimony at the trial and the Lunden Report

contained inconsistencies as to the amount owed by plaintiff to Logistics on its counterclaim for

amounts due under the Licensing Agreement. In the Lunden Report at Exhibit A, Mr. Lunden

noted that the “Total Net Amount Due Centrix Logistics” is “$505,965.” Id. In the Lunden

Report at Exhibit B, Mr. Lunden noted that the “Net Amount Due Defendant” is “$1,603,901.”

Id. Mr. Lunden and counsel to Logistics argued, at various times, that each number was the

owing to Logistics. This court further determined that plaintiff was not surprised at trial as to the

nature of the Counterclaims. See March 2008 Opinion at 37 (court refused to consider a

counterclaim not raised in the Counterclaims but did consider Logistics’ counterclaim for unpaid

fees under the Licensing Agreement); June 2008 Opinion at 11-12 (rejecting plaintiff’s

contention that Logistics abandoned its counterclaim for fees/commissions due under the

Licensing Agreement). The Third Circuit Court of Appeals did not disturb this ruling.

Despite HR’s protestations, Logistics clearly stated a Counterclaim based upon

the Licensing Agreement for breach of contract and conversion. HR’s assertions that Logistics

was attempting to present a new or different Counterclaim at trial or the Remand Hearing are

groundless. At the Remand Hearing, Logistics merely presented evidence to clarify its claim for

monies owed to it by HR under the Licensing Agreement. The court again reaffirms that

Logistics did not present a new Counterclaim or new theory for recovery at trial or the Remand

Hearing. 

At the Remand Hearing, plaintiff’s counsel requested a continuance asserting that

plaintiff was “ambush[ed]” because Logistics and its expert presented new evidence. (Remand

Hearing at 45.) Counsel for Logistics argued that “Mr. Lunden did nothing more than explain in

further detail how he arrived at his calculations in the two exhibits.” Id. The court rejected

plaintiff’s request for a continuance noting that all of the documents used at the Remand Hearing

were introduced at the original trial, other than Exhibit D-70, which plaintiff also listed as an

exhibit at the Remand Hearing and to which plaintiff did not object. Id. at 47-49.

8
amount owed to Logistics by HR under the Licensing Agreement. Mr. Lunden attempted to

explain at the trial that the lower dollar amount, the $505,965, was the amount owed to Logistics

“when you take everything into account.” (N.T., 10/24/07, at 194.) 

At the Remand Hearing, the parties were asked to clarify the amount due to

Logistics by plaintiff in counterclaim damages under the Licensing Agreement. See N.T.,

1/21/10, at 3 (court emphasized that a “very limited remand” is before the court; “the issue is

really the amount of the counterclaim damages”). 

1. Lunden’s Expert Report, Exhibit A.

Logistics presented the testimony of Mr. Lunden at the Remand Hearing. Counsel

for Logistics asked Mr. Lunden to explain Exhibit A to his expert report introduced at trial. Mr.

Lunden testified that the $505,965 figure on Exhibit A of the Lunden Report is the “worst case

basis,” making all assumptions in the light most favorable of plaintiff. Mr. Lunden further

testified as follows:

When I first met Mr. Black, he described to me the nature of the dispute

and that he didn’t have any confidence in any of the financial statements that Mr.

Mazzoni had put together. And the purpose of Exhibit A was to present a worst

case scenario. If, for some reason, [the court] didn’t find that the general ledgers

that existed as of August 2003 were the most meaningful indication of the

transactions between the parties, the purpose of Exhibit A was to present on a

worst case basis, looking at other information, what the causation factors were

that would enable [the court] to conclude whether or not the actions of Mr. Black

caused the inability of Centrix HR to pay its taxes. And the purpose of Exhibit A

was to look at everything on a worst case analysis, making assumptions in the

most favorable light possible to Centrix HR as to what the amount of damages

were. But it was dependent on two major offsets. The first significant offset were

[sic] the transfers to EMG. And [the court] now ruled, as a matter of fact, that

those transfers do not belong in the calculation. 

. . .

Additionally, I included in my analysis on Exhibit A my measure of the

operating losses that Centrix HR Logistics suffered. If you look at the books and

9
records in their original form, those books reflect those losses. So if you

determined that the general ledger balances that set forth the amounts payable

between the two companies are accurate, then you would not take that offset. But

I included it in Exhibit A in kind of a worst case scenario because I did not know

whether or not [the court] would find the book’s original entry to be reliable for

measuring damages.

(Remand Hearing at 7-9.) Mr. Lunden explained again that Mr. Black had expressed concern

that plaintiff’s books and records prepared by Mr. Mazzoni may not have been reliable. Id. at 9-

10.6

By way of example, with respect to the assumptions he made in calculating

Exhibit A, Mr. Lunden explained that the $505,965 figure includes offsets in favor of plaintiff for

transfers to EMG in the approximate amount of $486,200. (Remand Hearing at 8.) This 7

explanation is consistent with Mr. Lunden’s testimony at the trial that $505,965 was the amount

owing to Logistics “when you take everything into account.” At the trial, Mr. Lunden testified

with regard to Exhibit A and the $505,965 figure and explained as follows: 

Although I had no way of identifying what those pipeline payable

disbursements were, I felt it appropriate to give the benefit of a doubt to say that

all of the transfers to EMG during that transition period represented payment of

preexisting payables for the old transactions prior to the establishment of the new

venture.

Plaintiff’s counsel objected to Mr. Lunden’s testimony arguing that the expert was 6

“modifying his report to go in a different direction now.” (Remand Hearing at 11.) This court

rejected plaintiff’s objection finding that the witness was “clarifying how he came up with the

two different numbers” ($505,965 vs. $1.6 million). Id. at 13. 

EMG, or Employers Management Group Inc., was a company that provided back 7

office functions, such as processing cash receipts or preparing payroll. EMG had numerous

clients throughout the eastern United States. EMG was owned by defendant Black and his

former business partner, Robert Brown. Defendant Black and Mr. Brown ended their

professional affiliation in late 2000. In April 2001, defendant Black relinquished his ownership

interest in EMG to Mr. Brown. See March 2008 Opinion at ¶¶ 19, 21-22.

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So, I’ve reduced my offset to account for that probability because my

purpose here is to quantify what is the net economic affect of all the transactions

generated by Centrix HR Logistics.

(N.T., 10/24/07, at 192.)

In its March 2008 Opinion, this court concluded that plaintiff was not entitled to

offsets for loans it made to EMG. (March 2008 Opinion at 24-26.) Hence, the $505,965 figure

is inaccurate because it is based upon inaccurate assumptions Mr. Lunden made in favor of

plaintiff due to his lack of knowledge regarding what the court would decide on which offsets

plaintiff would be allowed to take against amounts owed to Logistics under the Licensing

Agreement. 

In its June 2008 Opinion, this court explained that Mr. Lunden arrived at the

lower figure of $505,965, “if you take everything into account and if you accept the arguments in

the counterclaim and if you find liability.” (June 2008 Opinion (citing N.T., 10/24/07, at 194).) 

The court then stated that it was “unclear” what was taken into account by Mr. Lunden to arrive

at this figure. At the Remand Hearing, Mr. Lunden clarified the procedure he used to calculate

the $505,965 figure. From Mr. Lunden’s explanation, it is clear to this court that the $505,965

figure from Exhibit A to Lunden’s Expert Report does not accurately represent the amount owing

to Logistics by plaintiff under the Licensing Agreement. 

2. Lunden’s Expert Report, Exhibit B.

During the Remand Hearing, Mr. Lunden testified regarding Exhibit B to his

report, which showed the amount owed to Logistics by plaintiff to be approximately $1.6 million.

Exhibit B is an analysis of what the books of original entry show as of

August 31, 2003, as the net intercompany balances between the two different

entities. And it shows that if you look at the books of one entity and compare it to

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the other entity, and you net all the due to, due from’s out, they’re within $139 of

each other. And it would cost more than $139 to figure out why the two are

different. But from an accounting standpoint, I would say that they are similar,

that they come to the same conclusion, that they reflect the same economic set of

transactions, they are essentially similar. 

(Remand Hearing at 13-14.) 

Logistics introduced into evidence at the Remand Hearing Exhibit D-70, which

Mr. Lunden described as “a balance sheet [of HR] that was prepared from the trial balances that

reflect the general ledger balances.” (Remand Hearing at 16.) Mr. Lunden explained that 8

Exhibit D-70 is the “most meaningful source of information” because it was prepared by

plaintiff’s accounting staff, not by Blaise Mazzoni , and because it was prepared 9

contemporaneously with its stated date of August 31, 2003. (Remand Hearing at 18.) According

to Exhibit D-70, the amount owing to Logistics by plaintiff is $1,603,673.49. See Ex. D-70.

3. Plaintiff’s Expert Report and Blaise Mazzoni’s Tax Returns.

Plaintiff’s expert, Christopher Nawn, appeared and testified at the trial, and

submitted an expert report. See Tr. Ex. D-61. Plaintiff did not call Mr. Nawn to testify at the

Remand Hearing. At the trial, Mr. Nawn did not dispute that plaintiff owed Logistics $1.6

million, and used this figure as a basis for his calculations. (June 2008 Opinion at 13; N.T.,

10/23/07, at 175-76.) At the Remand Hearing, Mr. Lunden was questioned whether Mr. Nawn’s

expert report supported Mr. Lunden’s conclusion that the $1.6 million was the amount owed by

Exhibit D-70 was not a trial exhibit. Logistics identified Exhibit D-70 in its 8

pretrial memorandum for the Remand Hearing. Plaintiff also listed Exhibit D-70 as its own

exhibit, Exhibit P-60, for the Remand Hearing. (Remand Hearing at 47-48.) Plaintiff’s counsel

did not object to the admission of Exhibit D-70 into evidence. (Remand Hearing at 122.)

Blaise Mazzoni, at all times relevant to this litigation, has been the owner of 9

plaintiff.

12
plaintiff to Logistics. (Remand Hearing at 29.) Mr. Lunden noted Mr. Nawn’s testimony where

Mr. Nawn stated that he used Exhibit D-61 to prepare Blaise Mazzoni’s tax returns. (Remand 10

Hearing at 33.) 

Review of Exhibit D-61 is helpful in determining the amount owed by plaintiff to

Logistics under the Licensing Agreement. Exhibit D-61 at HR089-090 is plaintiff’s balance

sheet as of December 31, 2002. As of that date, plaintiff reported “Licensee Fees & Comm.

Payable” as $922,627.74. Similarly, plaintiff’s balance sheet as of December 31, 2003, reported

“Licensee Fees & Comm. Payable” as $1,888,392.81. (Tr. Ex. D-61 at HR058-059.) The figure

espoused by Lunden in Exhibit B of his expert report, $1,603,901, is as of August 31, 2003. Mr.

Lunden testified that the difference between the $1.6 million figure in Lunden’s report and the

$1,888,382.81 figure from Exhibit D-61 represents the difference in commissions from

September 2003 through December 31, 2003. See also Remand Hearing at 33-38, 41-43. 11

Moreover, the difference between these two numbers is $965,765.07, the

approximate amount of deduction Mr. Mazzoni took on his 2003 tax return Schedule C relating

Since plaintiff is owned by Mr. Mazzoni, plaintiff does not file a tax return 10

separate from Mr. Mazzoni’s. (Remand Hearing at 33-34.)

Mr. Lunden addressed an inconsistency between plaintiff’s December 31, 2003 11

balance sheet, which reported “Licensee Fees & Comm. Payable” as $1,888,392.81, and Mr.

Nawn’s report, which reported “Licensing and Commissions Payable” as $1,688,393. (Tr. Ex.

D-61 at Ex. A.) Mr. Lunden explained that the difference is a typographical error. The evidence

supports this explanation. In Exhibit A of his expert report (Tr. Ex. D-61), Mr. Nawn recites the

“Licensing and Commissions Payable” as of December 31, 2002 as $922,628, the figure reported

on plaintiff’s December 31, 2002 balance sheet. The amount of such payables for 2003 is the

figure reported on plaintiff’s December 31, 2003 balance sheet – $1,888,392.81.

13
to plaintiff . See Tr. Ex. D-61 at HR099. Mr. Lunden explained the significance of this claimed 12

deduction on Mr. Mazzoni’s tax return.

So what Centrix HR, LLC was saying to the federal government is, this is

not our money. Because it is not our money we don’t have to pay tax on it. And

if you look at the amount that they deduct over a two-year period, it’s $1,888,000. 

They take a deduction for licensing and commissions payable. And I submit that

that arises from the licensing agreement and the nature of the transactions between

the parties during the relevant time frame.

. . .

So he classifies on his tax return $961,000 of costs for licensing fees and

commissions that are not his income but are due to somebody else. . . . That would

be due to Logistics. As you look at the Licensing Agreement, that’s the amount of

money that should have been transferred into the escrow account and wasn’t. In

part, because if you look at Exhibit A of Mr. Nawn’s report, Mr. Nawn tries to

characterize what happened to the money. And he is saying it was transferred to

EMG. So it’s part of the transfers that appear at the very bottom of Exhibit A.

(Remand Hearing at 30, 37.)

4. Mr. Lunden’s Conclusion.

Mr. Lunden concluded that the $1.6 million figure “is the most meaningful

estimate of the economic harm” between plaintiff and Logistics. (Remand Hearing at 39-40.) 

The evidence submitted at the trial and the Remand Hearing support this conclusion. Plaintiff

presented no evidence at the Remand Hearing to counter the testimony of Mr. Lunden. Mr.

Mazzoni was present in the courtroom but was not called to testify regarding the information

contained in his tax returns. Plaintiff’s expert, Mr. Nawn, was not called to testify regarding

amounts on the tax returns he prepared for Mr. Mazzoni or to explain where Mr. Lunden’s

analysis contained error. This court finds the testimony of Mr. Lunden, the only evidence

presented at the Remand Hearing, to be credible and persuasive. 

The amount of deduction claimed by Mr. Mazzoni for “Licensee Fees & Comm. 12

Payable” was $961,715. (Tr. Ex. D-61 at HR0099.)

14
The court must, however, distinguish between two figures as the measure of

damages owed to Logistics – $1,603,673.00 and $1,603,901.00. In the March 2008 Opinion, this

court awarded Logistics $1,603,673.00 on its Counterclaims. (March 2008 Opinion at 37-38.) 

The court obtained this figure from Lunden’s Report at Exhibit B. (Tr. Ex. D-50.) This figure

was identified as “LP Centrix HR Logistics CR,” and was calculated using plaintiff’s own books

and records. Id. As noted by the Third Circuit, Exhibit B actually contains two figures. The

second figure is in the amount of $1,603,901, and is identified as “Net Amount Due Defendant.”

Id. See Third Circuit Opinion at 7 n.1. The Third Circuit declined to address this discrepancy

since neither party sought correction. Id. 

This court, however, given the protracted proceedings in this matter and in an

effort to be very clear and correct in its determinations, sought an explanation at the Remand

Hearing as to which figure correctly represents the amount of damages owed to Logistics by

plaintiff. The following colloquy took place at the Remand Hearing:

Court: The Court of Appeals in a footnote noted the discrepancy between

the 1,603,673, which is the number I used, and the 1,603,901. 

What number should it be?

Lunden: I don’t know. . .. The two books don’t agree with each other. That

is not uncommon in preparing financial statements that summarize

thousands and thousands of transactions. And I don’t think it

matters. I would say that damages, at best, are estimates and they

are based on the most meaningful information that’s available and

that the two sets of records are close enough to each other that

either one would be a meaningful estimate of the amount that one

company believes is due the other company.

(Remand Hearing at 14.) Mr. Lunden also made the very practical observation that “it would

cost more than $139 to figure out why the two are different.” Id. at 13. Mr. Lunden stated as

15
follows later during the Remand Hearing. 

 Court: Is it 1,603,901 that’s on Exhibit B of your report, as opposed to the

number I used, 1,603,673, which is part of the long-term liabilities. 

Do you see that, there’s a number of 1,603,673, which is listed

under long-term liability Centrix HR Logistics CR.

Lunden: Yes, Your Honor.

Court: I used that number, which apparently is not the correct number.

Lunden: In my opinion, it is not quite the correct number because it’s part of

a whole series of accounts that net to 1,603,901.

Court: 1,603,901 is the correct number?

Lunden: In my opinion, yes.

(Remand Hearing at 40.)

Mr. Lunden admitted to being unsure which figure best represented the amount of

damages suffered by Logistics. Mr. Lunden stated that the difference between the numbers is

$139, when the difference is actually $227.51. Additionally, Mr. Lunden explained that Exhibit

D-70 is the “most meaningful source of information” because it was prepared by plaintiff’s

accounting staff, not by Blaise Mazzoni, and because it was prepared contemporaneously with its

stated date of August 31, 2003 using plaintiff’s own balance sheet. (Remand Hearing at 18.) 

According to Exhibit D-70, the amount owing to Logistics by plaintiff is $1,603,673.49. See Ex.

D-70. Plaintiff presented no evidence on this issue. 

Given the confusion in the testimony regarding these two figures, and in light of

the Third Circuit Court of Appeals’ decision not to disturb the lower figure originally accepted

by this court of $1,603,673.00, the court declines to amend the judgment order in this regard.

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5. The Inexactitude of the Damage Amount.

Counsel for plaintiff questioned Mr. Lunden in detail at the Remand Hearing

pointing out that the damage amount espoused by Mr. Lunden for Logistics’ Counterclaims is not

without uncertainty. For example, Mr. Lunden admitted that the damage figure he calculated is

the “net effect of all the economic transactions” between the parties. (Remand Hearing at 112.) 

Mr. Lunden admitted that he could not “say with certainty that those are fees and commissions.” 

Id. However, Mr. Lunden did testify that in his opinion, the numbers are “directly related to the

Licensing Agreement” and that the monies should have been placed in the Reconciliation

Account as alleged in the Counterclaims (Counterclaims ¶11). See Remand Hearing at 30, 37,

112. See also Remand Hearing at 112-13 (Plaintiff’s counsel questioning Mr. Lunden regarding

certain general ledger entries that appear to predate the Licensing Agreement, and Mr. Lunden’s

response); 116-17 (Mr. Lunden cannot “rule it out” that the $1.6 million figure includes

disallowed receivables).

It has long been the law in the Third Circuit Court of Appeals that “the law does

not command mathematical preciseness from the evidence in finding damages, [but] sufficient

facts must be introduced so that a court can arrive at an intelligent estimate without speculation

or conjecture.” Rochez Bros., Inc. v. Rhoades, 527 F.2d 891, 895 (3d Cir. 1975). See also

Acumen LLC v. Advanced Surgical Servs., 561 F.2d 199, 214 (3d Cir. 2009) (citing Rochez

Bros. when stating, “the law does not require exact precision in the calculation of damages”). 

This is particularly true where, as here, plaintiff’s own actions make such certainty impossible. 

See Third Circuit Opinion at 11 (“In cases where a defendant’s wrongful conduct renders an

exact calculation of damages difficult, . . . courts will not permit a defendant to profit from its

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misconduct by allowing the defendant to avoid damages based on the plaintiff’s failure to

provide precise evidence of damages.”). 

Here, because Mr. Mazzoni, as the sole owner of plaintiff, did not place the

amounts due Logistics into the Reconciliation Account as required by the Licensing Agreement, 

Logistics had to “go through all of this documentation and study to determine at the end of the

day what [plaintiff] owed Logistics.” (Remand Hearing at 109-10.) Plaintiff will not be heard to

complain about the inexactitude of the damages when the actions of plaintiff’s owner, Mr.

Mazzoni, impeded Logistics’ ability to calculate the damages with greater precision. This court 

finds the evidence presented at the trial and the Remand Hearing to be sufficient for this court to

arrive at an intelligent estimate of Logistics’ damages on its Counterclaims without speculation

or conjecture.

6. Plaintiff’s Motion to Strike.

As noted above, well after the conclusion of the Remand Hearing, plaintiff filed a

Motion to Strike Defendants’ Expert Report and Testimony Pursuant to Fed. R. Evid. 702 and

703. In its Motion to Strike, plaintiff again raises its failed argument that “[d]efendants did not

pursue a counterclaim for fees at the underlying trial.” See supra n. 5. The court has rejected this

assertion numerous times and does so again. 

In the Motion to Strike, plaintiff also raises arguments concerning the quality of

the evidence presented at the Remand Hearing asserting that the evidence presented was too

speculative to form a basis for an award of damages to Logistics. For example, plaintiff argues

that Mr. Lunden’s reliance on plaintiff’s balance sheets which identify certain amounts as

“License Fees and Commissions” was improper because the balance sheets “do not identify

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license fees and commissions owed to whom and for what.” (Pl.’s Mem. of Law Supp. Mot. to

Strike at 12.) Mr. Lunden credibly testified that these amounts were related to the Licensing

Agreement and to Mr. Black’s companies. To the extent that these amounts were related to other

entities or relationships, Mr. Mazzoni, who was present at the Remand Hearing, could have so

testified, but did not. 

While this court acknowledges that Logistics, as counterclaim plaintiff, bears the

burden of proving its damages, plaintiff cannot cast doubt upon the evidence presented only in

argument by counsel, especially when a witness was available at the Remand Hearing to counter

the evidence presented. The testimony of the witnesses is the evidence, not the argument of

counsel. The court finds the testimony of Mr. Lunden, the only evidence presented at the

Remand Hearing, to be credible, relevant, competent, reliable, basically unchallenged by other

evidence and not so speculative as to preclude the calculation of damages in favor of Logistics on

its successful counterclaim. 

To the extent the Motion to Strike raises issues that could have been raised at trial

or the Remand Hearing, they are untimely and waived pursuant to Fed. R. Evid. 103(a)(1). See

United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 238-39 (1940) (counsel “cannot as a

rule remain silent, interpose no objection, and after a verdict has been returned seize for the first

time” on a claim of error).

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For all the above reasons, the court reaffirms its award of $1,603,673.00 in

damages to Logistics on its Counterclaims and the Motion to Strike is denied. An appropriate

order will be entered.

BY THE COURT:

/s/ Thomas J. Rueter 

THOMAS J. RUETER 

Chief United States Magistrate Judge 

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